Lehman Brothers Bankhaus AG I. Ins v CMA CGM

Under article 27 of the Judgments Regulation, proceedings involve the same cause of action only where they concern the same facts and rule of law. Different contractual and domestic-law issues do not satisfy that test.

Article 28 requires a broad, commonsense assessment of the degree of connection between related actions, followed by a value judgment about whether hearing them together is expedient to avoid irreconcilable judgments. The assessment is made at the hearing of the stay application and is not mechanical. The existence of an exclusive jurisdiction clause is relevant but does not automatically prevent a stay where the foreign proceedings arise from a distinct domestic-law procedure.

Lehman Brothers Bankhaus AG I. Ins claimed approximately US$6 million from CMA CGM under English-law settlement agreements. The agreements provided for exclusive jurisdiction in the High Court of England and Wales.

CMA had commenced proceedings in France seeking a suspension of its payment obligations under article 1244-1 of the French Code Civil. It later sought clarification concerning the effect of that suspension on the contractual payment obligations. CMA applied for the English proceedings to be stayed under articles 27 and 28 of EC Regulation 44/2001.

The central issues were whether the French and English proceedings were pending proceedings involving the same cause of action, or related actions sufficiently connected to justify a stay.

1. The court refused to decline jurisdiction under article 27 but granted a stay under article 28 pending the final outcome of the French proceedings.

2. The French proceedings were pending when the English proceedings commenced. The fact that the French procedure was unfamiliar in England did not prevent it from constituting proceedings for the purposes of articles 27 and 28. The strength of CMA’s case concerning the continuing French proceedings was a matter for the French appellate court.

3. Article 27 was not engaged. The expression same cause of action was a European concept, comprising the facts and rule of law relied on as the basis of the action. The English proceedings concerned contractual liability and the amount payable under the settlement agreements. The French proceedings concerned protection for a business in financial difficulty and the effect of a court-ordered suspension. They therefore did not involve the same facts and rule of law.

4. Article 28 required two stages. First, the court assessed the degree of connection between the proceedings. Secondly, it made a value judgment as to whether it was expedient to hear them together to avoid irreconcilable judgments. The test was broad and commonsensical, but the provision was not to be applied mechanically. The relevant date for assessing relatedness was the hearing of the stay application.

5. The English claim could not be determined in LBBA’s favour unless the French-law proposition was wrong, or was right but did not assist CMA as a matter of English private international law. That created a substantial connection and a substantial risk of trespassing on the French proceedings and producing irreconcilable judgments.

6. The exclusive English jurisdiction clause did not prevent the stay. The French proceedings arose from a French domestic procedure which was required to be available to businesses in France and could not be utilised in England. It was advantageous to await the French courts’ decision on whether they would determine the French-law proposition and, if so, its answer and reasons.

The judgment was a first-instance decision of the High Court (Commercial Court). The court had previously announced that the proceedings would be stayed and gave full reasons in this judgment.